Business Model Innovation through Strategic Alliances & M&A’s

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Question 1

It has been seen that steel business is one of the base of every nation. It would contribute maximum in the overall growth of the economy. Tata steel is one of the largest private sectors steel producers with total revenue of 38000 crores. The main value chain of Tata group is basically extended from mining to the steel goods in the metal sector. Over the last so many years, they are enriched the legacy handed over by their founder J.N Tata. Their vision is to aspire to be the largest steel sector benchmark for creative value and corporate governance. They recognise that honesty and integrity are the vital elements of strong and constant enterprises, profitability used to provide the primary spark for economic activity. Overall, steel industry seeks to scale the heights of excellence in all that it does in an environment free from danger and thereby reaffirms their trust in democratic values (Shinkle and Spencer, 2012).

Tata steel to increase their products and solution and also used to expand their products into the market. While most of the investors used to build physical assets, the industry continues to make valuable contribution towards developing social capital especially in society in and around the areas of their business. According to the annual report of 2015-16, production was begun at the 3 MnTPA kalinganagar steel plants. This would crucial make improvement in volume of growth and expands their product portfolios up to an extent. Such as ship building, defence equipment, infrastructure and aviation industries. This would also show their aims on continuous modification as well as expansion in rolling & finishing ability to diversify their product portfolios. In the south East Asia operations had increasing performance. Because of which cost rationalisation and portfolios optimisation have started producing specific results for the companies. Tata had continues to make all kind of efforts to produce sustainable value to their stakeholders, even in testing time (Peng, 2013).

Merits: During the year, they have able to manage our liquidity and financial base carefully with appropriate balance to create long term assets such as capital expenditure of 11486 crores.

Demerits: Despite of this, net debt enhance is not sharp and their liquidity steps continues their operations excellences to continue their operational exposure at the same point of time.

Integrated organisation perspective:  It is known as integrates all of their organisation system and process in to an individual framework that can enable Tata to work as a single body with their unified objectives. They always tried to focus on the system individually, often in some kind of conflict. The core of Tata steel value creation process is the business model which used to present an effective integrated steel manufacturing operation in mining steel production. The company manufacture outputs and drawing inputs from different capitals. The business activity aimed to minimise the negative implication and to increase their competitive position as well as the brand image more closely. The results of the business activities on different capital are indicated in the business model. Tata used to measure these results at definite frequencies and take valuable action to make any specific modification in near future time. The company used to follow an integrated strategy planning and deployment procedure in standardised across all business processes and the value chain followed by the company for various products that are manufactured by Tata (Purce, 2014). Organisation would like to show that while all the information measure are for short term support against unfairly cost imports, the long-term attainment of competitiveness of the steel industry in the global level will depend on the cost of business operations. It consists of regulatory costs, infrastructure efficiency for inbound and outbound transportation of raw material as well as availability of finished goods. Tata have seen significant increment in levies, duties and regulatory expenses in the mining areas in recent past. In case this particular trend goes on regular basis in near future time, it will accurately impact the long term attractiveness of stakeholders as well as the internal investors. After the analysis of the Tata group situation, it has been seen that in case Tata need to follow only single perspective portfolios so that the entire focus in one increase the market share as well as validity of the products. With the summary of both perspective they can be able to attain their targets in proper manner that results in negative implications on the overall growth as well as sustainability of their business for very long time.

Question 2

Business model innovation is said to be development of latest, unique concepts that can support an organisation financial viability and thus, conscious changes of their existing business model. The creation of new model can better satisfy the requirements of their customers than existing one. It is consider neither as simpler and less risky, as it demanded neither new technologies nor for the development of brand new market. It is all about providing existing brand or products that are manufactured with the available technology to existing market segment. The results of core business activities on the different capital are indicated on business model (Luthans and Doh, 2012). Some of the activities that are listed on the model are:

• RM mining and Beneficiation: It is about the extraction and processing of raw material for iron making purpose.
• Iron making: It converts iron ore to hot metal in order to make steel products.
• Steel making and rolling: Transformation of hot metal into various types of grades of steel material to the finish products.
• Finishing & downstream: Conversion of steel items into finished products according to the demand of customer demand.

Fundamental to Tata activities and their process is the primary culture of innovation and that can regulate new products in order to meet companies as well as customer requirements. The best part of the Tata Company is to leverage best available resources and technologies that can increase sold waste utilisation and make products and processes more environmental friendly. Tata is not only unique in their magnitude of operations but also in their people practices our approaches and overall conducts that are performed by them in their regular course of business.

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Technology innovation: It basically comprises of new items and processes that are significantly based on technological factors. An innovation has been formulated if it has been introduced within the market for the purpose of increase market share as well as goodwill at the same point of time. Tata have face drastic challenges in order to keep up with the effective pace of technological changes and to ensure that production related facilities are modern to be efficient with fewer chances of impacts on the environment. Digital solution for the steel sectors are growing effectively with the aim on reducing carbon footprint, with the use of inferior raw material, yield improvement as well as solid waste utilization (Milne and Gray, 2013). There are certain initiative driving cost is mentioned below:

• Mining: To enhance the captive coal availability, initiatives like high wall mining, faster excavation method as well as use of high capacity equipment in best possible areas. They are working toward growing increasing clean coal through increasing in combustible recovery and make modification in separation efficiency.
• Rolling & finishing: Tata have taken use of various technologies to make improvement in their product quality such as vertical bending caster among other.

The technology innovation can be done through using various entry modes in the international market. These are vital for the overall development of company and to increase the profitability position at the same point of time.

Strategic alliance: It is an effective agreement among two or more parties to deal with a complete set of decided norms upon set objectives those are needed during the remaining independent organisations.  It is web of contracts among two or more partner that can share the commitment to reach at certain goal through pooling their resources together and make coordination in their overall activities. Strategic aims are the results of planning process that can help company to conduct their business at international level. It becomes more popular in global level. Company used to provide businesses with different benefits that consist of access to markets, sharing of risks and expenses, effect of all kind of shared knowledge that can help in order to gain competitive advantage in the marketplace (Compact, 2013).

Merger and acquisition: It is another mode of doing business at the international level as well as one of the best modes. In which two different parties tend to make transaction in which the ownerships of companies, other business organisation with other global entities. This strategy is the area of corporate finance, management and plan must deal with purchasing and joining with other industries. There are various elements that are required to be taken into account when planning for technology integration. The framework tends to help form the overall foundation of an integration that can build on strength of both companies that can drive the business goals of Tata at global level. In accordance with the Tata, merger tends to produce synergies as well as economies of scale and cutting prices for their products. This will help the companies to increase production that take at large scale level.

As per the research, it has been analysing that Tata would not have to mix of their resources and capabilities in order to bring the digital and mobile technology innovation in respect to attain their aims and objectives. “Pravesh” is the latest innovation of Tata steel opens up a new era of opportunities for home builders and commercial builders. It is an innovative step for Tata in steel doors and windows by elegance of wood from the house of Tata steel.

Blue ocean strategy: It is said to be low cost to open up a new market space and develop a new demand in the market. It is all about creating and collecting in contested market space so that this will make competition irrelevant. According to this particular strategy, company can create uncontested market space as well as create new capture demand. Align with the entire system of Tata group activities in pursuits of differentiation and low cost (Visser and Tolhurst, 2017).

Business model innovation: Tata need to make use of this particular strategy in order to conduct their operation more effectively in domestic as well as international level. This consists of certain canvas some of them are mentioned below:

• Customer segment: It is essential make selection of appropriate customer segment in which chances of getting maximum growth can be more in the foreign market. It has to upper class people that can have the ability to buy products at any costs.
• Value proposition: Another crucial element of business model is related with the value proposition arises from the products and services that are related with resolving issues for a customer segment (Annual report Tata group, 2015).
• Channel: It is related with the mode through Tata company can sale their products their customers to convey the value which are offered by the company to them.

Question 3

Corporate governance is an innovative system of rules, practices that are processes through which a firm is directed and managed their business operations at every level. It is essentially associated with assessment the interests of a Tata main stakeholder such as suppliers, financiers, government and society. At Tata steel, they ensure that a proper corporate governance regulation and best practices does not only boost long-term investors but also respect minority duties. As per the information mentioned in the annual report of Tata, it has been found that all the guidelines that are mentioned in it make sure that board will have the essential authority and processes to analyse and evaluate the company’s overall operations (De Grosbois, 2012). Further, these guidelines must allow the board to make reliable decision regarding the independent of the management. The board would also shows that the core of our corporate governance practices and looks how the management serves and protect the long terms interest of their investors.

CSR: The company method to CSR is to guided through the CSR and makes affirmative action policies toward provide valuable support to their employees. During the period of time, social initiatives have evolved from being aimed on delivering better future to the society. To make participate in delivering with the company to create self-sustained society. There is a well organise committee of board member that is held responsible for looking after the facts and matters those are related with the corporate social responsibility. It comprises of valuable personalities from the development sectors through which company can meets annual senior management. Tata has planning to make an annual spend of 204 crores on societal activities (Dashwood, 2012). It would also encourage their employees and partner in increasing a sense of social commitment for stakeholder by different volunteering plans and events.

Sustainability: Tata business operations are widely confined to large areas that have a sizable customer base. Government interventions alone cannot make improve the social-economic situation of the local community. Share of roles and responsibility are made in that ways to satisfy the needs and demand of the customers. It has been seen that sustainability practices are guided by overall vision and mission policies as to have an integration method to deal with the requirement of people and profits. All kind of exercise was done to help our senior administration in characterizing material issues that have to decide the degree to which maintainability issues affect variables that add to our business achievement in coming period of time.

Leadership concepts: It is one of the effective process through which an individual can impacts to other to attain an objective and direct the organisation in a manner that make it coherent. It will be vital for Tata group to implement effective leadership skills in order to guide those right directions (Keyes, 2016). There are various crucial theories that are associated with an organisation. Some of them are mentioned below:

Behaviour theory: This particular theory results from the analysis that aimed on activities of leaders to determine behavioural pattern. It can affect employee’s satisfaction and overall performances. Tata company can uses this theory for the purpose of maintaining proper balance among their staffs and employees.

Contingency theory: This specific theory movers away from the personality of leader to determine relationship with the group of followers which would make emphasize on the situation that are best suitable for the leader of employees within Tata group (Peng, 2012).

Question 4

Personal reflection on learning

During the research studies I have analyse various essential aspects related with the global corporate governance. It will be great help for me to take essential decision based on the overall evaluation of facts and data. Tata group is one of the largest steel producers in various areas of countries. I have applied various theories and concepts that can be helpful in attaining future growth while going into the international market. I have found certain entries modes which are beneficial for the company while moving or expanding their business at global level. There are various tough competition in the market in accordance with the steel sectors. Thus, Tata need to make use of innovative business model and technology to deal with all kind of specific ideas within the operations.

There are certain specific role of strategic alliance which I have analysed such as, exchanging knowledge and information among two similar companies at the same time. While, M&A role is to increase the business as well as growth with the motive to earn maximum amount of profit in near future time. As from my perspective, M&A is primary ways of conducting business at international level. The market share of the company can be exchange within the two companies. I have learned various skills and knowledge that can be help in attaining overall benefits in my coming career. This will increase overall efficiency and future growth for the company can be planned effectively to get maximum growth in new few years time.

CONCLUSION

From the above project report, it has been concluded that global corporate strategy can help the company to make their business growth and sustainability plan at international level. For this purpose, it is essential to make use of various intergrated presepctive and business model innovation strategies are required to be taken into account. Along with this, certain theory and concepts related with CSR, Corporate governance, sustainability and leadership is needed to be analysing effectively in order to reach at various level of growth position. All the analysis can lead to make overall decision related with making business at global level.

REFERENCES

• Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
• Peng, M. W., 2013. Global strategy. Cengage learning.
• Shinkle, G.A. and Spencer, J.W., 2012. The social construction of global corporate citizenship: Sustainability reports of automotive corporations. Journal of World Business. 47(1). pp.123-133.
• Purce, J., 2014. The impact of corporate strategy on human resource management. New Perspectives on Human Resource Management (Routledge Revivals). 67.
• Luthans, F. and Doh, J. P., 2012. International management: Culture, strategy, and behavior. New York: McGraw-Hill.

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